Colorado preps to tax Internet

With Amazon’s backing, tax-free online shopping may be finito

DENVER – Colorado Democrats jumped at the chance to get the state ready to collect Internet sales taxes Thursday.

They have been thwarted by the courts in previous years when they tried to pass an “Amazon tax,” named for the heavyweight Internet retailer that has fought hard to stay tax-free in as many states as possible.

Federal courts have sided with Amazon, saying states don’t have the authority to tax businesses outside their borders.

But this week in Washington, the U.S. Senate is on the verge of passing a bill to allow states to tax Internet sales, known as the Marketplace Fairness Act.

States would need to simplify their sales-tax systems in order to benefit. In Colorado, Speaker of the House Mark Ferrandino, D-Denver, introduced House Bill 1295 to get ready for the federal legislation.

Ferrandino said the Marketplace Fairness Act already has passed a test vote by a 74-25 margin in the infamously polarized U.S. Senate.

“Getting 74 of them to agree on anything is a very impressive thing,” Ferrandino said.

Even Amazon.com has given its support to the Marketplace Fairness Act.

Ferrandino’s bill aims to make it easier for out-of-state Internet businesses to pay taxes. Businesses would have to send taxes only to the state, and the state would parcel out revenue to cities and counties.

Also, local governments and the state would have to synchronize their laws to tax the same items, so candy, for example, would not be taxed in one jurisdiction and be tax-free in another.

Lobbyists for shopping malls, local businesses and local governments supported the bill Wednesday. Local businesses have complained that online sellers don’t have to collect sales taxes.

“I think that’s an unfair disadvantage to our brick-and-mortar stores that invest millions if not billions of dollars in our communities,” Ferrandino said.

The House Finance Committee voted 7-6 to advance Ferrandino’s bill. Republicans voted no, saying it was too soon to tell what Congress would do.

“I’m amazed at how many people we’ve had here today who think they know what’s going to happen in Washington,” said Rep. Jim Wilson, R-Salida.

Separately, the same committee killed a bill to try to impose sales taxes on Internet businesses right away. Republicans and two Democrats voted against the bill, with the Democrats saying the bill would have invited another lawsuit.